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Amazon Cites Record-Breaking Sales Amid Prime Day Disses

7/20/2015 08:00:00 AM Eastern

SEATTLE – A flurry of negative social media surrounding last week’s Prime Day sales event prompted a rare mid-promotion response from Amazon.com.

Reports of system glitches and limited inventory were compounded throughout the event by a seeming avalanche of tweets expressing disappointment in the e-tailer’s selection of flash-sale merchandise.

Representative was @ClevelandChick’s observation: “PrimeDay?” she tweeted. “More like clean out the warehouse day.”

In response, the company released a “Prime Day Update,” in which Amazon Prime VP Greg Greeley indicated that members of the affinity program are shopping at record rates, and that “peak order rates have already surpassed 2014 Black Friday.”

Specifically, by mid-day members had already purchased tens of thousands of Fire TV Sticks, 35,000 “Lord of the Rings” Blu-ray sets and 4,000 Echo smart speakers in 15 minutes, he reported.

“We also sold 1,200 of the $999 TVs in less than 10 minutes,” Greeley said. “And there are thousands more deals coming.”

The TV was Samsung’s 50-inch 4K Ultra HD 3D TV (HU8550 series) with 4K Video Pack, a discontinued model that retails for about $1,800.

The one-day event, ostensibly staged to mark Amazon’s 20th anniversary and touted by Greeley as “one of the biggest deals extravaganzas in the world,” was open to Prime adherents only, suggesting to some that its main intent was to grow and protect the membership-program motherlode.

Making that argument in a TWICE.com guest column was Tom Caporaso, CEO of FreeShipping.com parent Clarus Commerce. Caporaso cited the $99/year affinity program’s eye-popping conversion rates, and said Prime Day may have served to blunt customer trials of new membership programs like now-launching discounter Jet.com (founded by returning Amazon adversary Marc Lore), as well as a forthcoming three-day shipping service from Walmart.

“Prime Day is a shrewd marketing ploy, but it will also serve Amazon in ways that go beyond simply celebrating Amazon’s debut,” he observed.

Indeed, a new study from Consumer Intelligence Research Partners (CIRP) shows that Amazon’s 44 million U.S. Prime members, comprising 47 percent of its domestic customers, spend on average about $1,200 on the site, compared with about $700 a year for non-members.

The event also prompted a rather cantankerous response from Walmart, further fueling the discounter wars. “We’ve heard some retailers are charging $100 to get access to a sale. But the idea of asking customers to pay extra in order to save money just doesn’t add up for us,” said Walmart.com president/CEO Fernando Madeira in a company blog.

Instead, the world’s largest retailer offers low prices to all customers every day, he wrote, and upped the ante last week with “thousands of great deals” and a lower summer-long minimum order to qualify for free shipping ($35, from $50).

“We’re standing up for our customers and everyone else who sees no rhyme or reason for paying a premium to save,” Madeira said. Ironically, Walmart is trialing its own version of Prime, a three-day-shipping service reportedly codenamed “Tahoe” that will cost customers $50 a year.

Still, Madeira’s fighting words reflect Wal-Mart Stores’ prime directive under corporate president/ CEO Doug McMillon to dramatically improve the company’s multichannel prowess. To that end, the discounter has poured billions into its digital, e-commerce and mobile shopping capabilities under web czar Neil Ashe in anticipation of a bricks-and-clicks-dominant retail world, and in an effort to achieve online parity with Amazon.

Martin McNulty, CEO of global digital marketing agency Forward3D, believes the investments may likely pay off for Walmart. “With loyalty data, advanced distribution systems and multiple store locations, the real winner in the next wave e-commerce could in fact be Walmart,” he observed. “Instead of creating single buttons for single products [Dash Replenishment Service], Walmart has the opportunity to map your consumption of the most inane products and create seamless experiences for you that move beyond your desktop or even your phone.”

In the end, whether Amazon ultimately achieved Black Friday parity or earns a black eye for Prime Day is secondary, observed New Age Electronics president Fred Towns during a TWICE holiday webinar last week.

What matters, he argued, is that Amazon, and responding retailers, drew attention to the CE category during the traditional summer doldrums, and that’s a good thing for the industry.

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